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​​​​© 2019 by Lara Sass & Associates, PLLC 

 

The information contained on this website is provided for informational purposes only and should not be construed as legal advice on any subject matter.  If you wish to discuss the topics addressed on this website, or other estate planning issues, please contact Lara Sass & Associates, PLLC.

IF YOU WOULD LIKE US TO CONTACT YOU, PLEASE PROVIDE YOUR INFORMATION  BELOW.  Thank you.

CONTACT US * info@laramsass.com * (212) 971-9770

529 College Savings Plans

 

A 529 plan, also known as a college savings plan, is an excellent way to save for your child's or grandchild's college or graduate school education.  

Beginning in 2018, you can use up to $10,000 in 529 plan proceeds for elementary and high school costs.

 

529 plans allow you, a relative or a friend to put money aside as an investment for a child's college or graduate school education anywhere in the United States or abroad.  The money grows tax-free and is spent tax-free for eligible college expenses, such as tuition, certain room-and-board expenses, books and supplies. 

 

New York's 529 College Savings Program Direct Plan offers the following benefits:

 

Tax benefits

  • Earnings grow federally tax deferred.

  • Qualified withdrawals are federally tax-free.*

  • You can contribute up to $75,000 in a single year ($150,000 for a married couple filing jointly) for each beneficiary without incurring federal gift tax as long as you don't make any other gifts to that child for five years.**

 

Additional tax benefits for New York taxpayers

  • New York taxpayers can deduct up to $5,000 ($10,000 for a married couple filing jointly) in contributions to the Direct Plan on their state income tax return each year. ***

 

Minimum contribution

  • Open an account with just $25 ($15 if contributing through payroll deduction).

 

Annual fees

  • The only expense charged by the plan is a total annual asset-based fee of 0.16% of account assets.  The plan charges no advisor fees or sales commissions.

 

Option for other people to open accounts for your child

  • Relatives and friends can open an account for the same child.  Combined, these accounts can total as much as $375,000.

 

Investment management

  • Investments are managed by Vanguard.

 

Investment options

  • 3 age-based options that will automatically move your savings through a series of portfolios that become more conservative over time.

  • 13 individual portfolios that let you design and manage your own investment strategy.

 

 

* Earnings on nonqualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. Tax and other benefits are contingent on meeting other requirements and certain withdrawals are subject to federal, state, and local taxes. 

** In the event the donor does not survive the 5-year period, a pro-rated amount will revert back to the donor's taxable estate. 

*** Up to $10,000 is deductible from New York State taxable income for married couples filing jointly; single taxpayers can deduct up to $5,000 annually.  May be subject to recapture in certain circumstances such as rollovers to another state's plan or nonqualified withdrawals.